The changes made to the Employment Relations Act regarding ‘minimum standards’ remain important to bear in mind. As per our September 2016 update, employment agreements for staff employed after 1 April 2016 must already reflect the changes, while the 12-month period for pre-April 2016 agreements to be updated, which began on 1 April 2016, is fast running out.

‘Pay Equity’? What’s happening and what does this mean?

‘Pay equity’ is the principle that men and women should receive equal pay for jobs that, although different, require equal skill and are of equal value.

That concept is to be differentiated from ‘equal pay’, meaning the provision of the same pay to men and women doing the same work. Equal pay under the Equal Pay Act 1972 is the subject matter of the Bartlett v Terranova case (that remains before the Courts).

As you may know, the Joint Working Group (JWG), appointed by the government to develop and recommend ‘pay equity’ principles, has now reported back to government, which has accepted all findings and recommendations made[1]. The result will eventually be a process for employers and employees to deal with issues of pay equity between themselves at first instance, and following guidelines developed by the JWG. The process is not voluntary – the parties cannot opt out of it.

As presently understood, the process would be:

An employee would make a pay equity claim to their employer.

The employer would then consider the claim and would have to respond within a reasonable period of time. The merits of the claim would involve “consideration of whether the work is predominantly performed by women, may have been historically undervalued and subject to systemic undervaluation”. We anticipate that this will be a complex issue for many, if not all, considering such a claim. Once some claims have been addressed, additional guidance will no doubt be available from those.

The employer would also have to immediately notify other employees who might be affected by (or benefit from) the claim.

If accepted as a pay equity claim by the employer, the parties would bargain to resolve the claim, with guidance from the pay equity principles, including:

“A thorough assessment of the skills, responsibilities, conditions and degrees effort of the work must be undertaken”;

“The assessment must be objective, free from assumptions based on gender and fully recognise the importance of skills, responsibilities, effort and conditions that are commonly overlooked or undervalued in female dominated work”; and,

“Comparators [i.e. other kinds of roles] may be used so long as the comparator is not distorted by also being undervalued due to systemic undervaluation due to being ‘women’s work’”. Again, we anticipate that the “comparator” issue will be highly complex, including how to determine what each of “equal skill” and “equal value” means.

If parties reach an impasse, the existing dispute resolution mechanisms under the Employment Relations Act would be available. This would include mediation, and lodging the claim with the Authority, which could ultimately fix pay rates and other terms and conditions, on a similar basis to the existing facilitated bargaining process.

The Employment Relations Act and the Equal Pay Act will need to be amended to implement the above changes.

These changes are expected to be introduced in 2017, and so for now we will need to wait and see what final form the pay equity process takes. What is clear though is that the impact of the JWG’s findings, and this process, will be far reaching, particularly for those in female dominated industries. Watch this space.

For advice from our employment law specialists either call us on 04 801 5427, or contact us via email: